Calgary Independents Compton, Hornet to Merge
Two Calgary-based oil and natural gas independents, Compton Petroleum Corp. and Hornet Energy Ltd., have entered into a pre-acquisition agreement whereby Compton will purchase all of the common shares of Hornet for C$2 a share, or C$40.2 million, including C$8.2 million of net debt. Hornet's reserves total 4.4 MMboe, including 20.5 Bcf, and 70% are proven. Hornet also has 22,000 acres of undeveloped land.
Compton launched its friendly takeover bid in mid-May, consistent with its strategy to pick up assets in Southern Alberta, particularly the Brant area where it has several gas plays. Most of Hornet's properties are located in Southern Alberta, and Compton has gas plays there in Belly River, Bow Island and Glauconitic. Most of Compton's assets are throughout Alberta.
Hornet's production as of June 30 is expected to be 1,500 boe/d, 7.5 MMcf/d, with the balance oil and natural gas liquids. Compton estimates the cost of the acquisition is C$9.24/established boe and C$26,400/flowing boe.
In the first quarter of 2001, Compton's natural gas production averaged 94.6 MMcf/d, an increase of 23% from the same quarter last year. Natural gas liquids production was 2,024 bbl/d, up from 1,721 bbl/d in the first period last year. Oil production averaged 4,466 bbl/d for the first quarter 2001, a 7% increase from 4,188 bbl/d for the same period last year.
The transaction, which has already been approved by both boards, is expected to close in early July following regulatory approvals. The officers and directors of Hornet have agreed to execute pre-tender agreements representing more than 33% of the outstanding shares of the company under which they will agree to deposit and not withdrawn under the offer.
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